IMF predicts 7.75% growth for China's economy in 2013

BEIJING - The International Monetary Fund (IMF) said Wednesday that the Chinese economy is expected to grow by around 7.75 percent this year despite weak and uncertain global conditions.

The IMF's first deputy managing director David Lipton made the remarks at a press briefing held after the completion of the 2013 Article IV Consultation Discussions with China.

Economic growth should pick up moderately in the second half of the year after credit expansion gains traction, Lipton said, adding that the prediction is in line with an expected mild pick-up in the global economy.

Inflation is expected to hit 3 percent around the end of the year, while the external current account surplus is expected to remain around 2.5 percent of the GDP, he said.

Although progress has been made in external rebalancing, China's growth is still too dependent on investment, particularly in the property sector and by local governments, he said.

Lipton said high income inequality and environmental problems are further signs that the current growth model needs to change.

Chinese authorities have announced reforms intended to address these challenges in 2013.

During discussions between the IMF and authorities, the Chinese side emphasized its intention to embark on a comprehensive reform agenda that will ensure more balanced, inclusive and environmentally friendly growth.

While China still has significant policy space and financial capacity to maintain stability, the margins of safety are narrowing, Lipton said, adding that a decisive impetus to reform is needed to contain vulnerabilities and move the economy to a more sustainable growth path.

Chinese authorities are focusing on the financial sector, fiscal reforms and other measures to strengthen price signals and the framework for a well-functioning market.